WeChat, the popular social messaging app, announced on Tuesday that all new user registrations will be suspended until early August.
WeChat, also known as Weixin in China, said the suspension is due to an upgrade of security technology “in accordance with relevant laws and regulations” in a brief post on social media.
“In the meantime, the registration of new WeChat personal accounts and public accounts will be temporarily suspended,” the app, which is owned by Chinese tech giant Tencent (TCEHY), added. The company stated that new registrations will resume once the upgrade is completed, which is expected in early August.
Hundreds of millions of Chinese people use Weixin on a daily basis to message friends, share photos, hail rides, pay for things, book restaurants, order food, and a variety of other services. Weixin and WeChat, which are popular among the Chinese diaspora, including in the United States, have 1.2 billion monthly active users combined.
WeChat did not specify which laws it was referring to in its announcement, but the move comes amid a broader crackdown by Chinese regulators on technology and now education companies, which has alarmed investors. Tencent’s Hong Kong stock fell nearly 9% on Tuesday, marking its worst day in a decade.
Several tech companies, including e-commerce behemoth Alibaba (BABA), have been investigated for alleged monopolistic behavior or violations of customer rights, resulting in massive fines and overhauls. President Xi Jinping of China has backed the investigations, urging regulators to scrutinize tech firms as the country tightens its data privacy and security policies.
Chinese tech companies’ stock prices have plummeted this week, including Alibaba, Tencent (TCEHY), and food delivery platform Meituan. After Chinese regulators issued new guidelines calling for improved standards for food delivery workers, Meituan closed nearly 18 percent lower in Hong Kong on Tuesday, eclipsing Monday’s 14 percent loss.
China’s Cyberspace Administration temporarily halted the registration of new users on Didi, the ride-hailing app, just two days after the company’s blockbuster New York IPO, which was the largest US share offering by a Chinese company since Alibaba debuted in 2014.
The suspension was put in place by the regulator to “prevent the expansion of risk” during a “cybersecurity review,” but no reason for the investigation was given.
A few days later, the internet watchdog proposed that any company with more than 1 million users’ data must seek approval from the agency before listing its stock overseas. It was also suggested that companies submit IPO materials for review to the agency prior to listing.
Analysts at Nomura wrote in a research note on Monday that the crackdown on private businesses could further erode foreign investors’ confidence in Chinese stocks. “Bruised and shaken investors are now likely to ponder which other areas could potentially become the next target of expanded state control,” they said.